Stantec Tower is a part of the Edmonton Arena District (EAD), the joint venture between Katz Group and WAM Development Group. Designed to be a LEED Gold Certified building, this mixed-use office, retail and residential project will span approximately one million square feet.Supplied

Stantec Tower is a part of the Edmonton Arena District (EAD), the joint venture between Katz Group and WAM Development Group.Supplied

Stantec Tower is a part of the Edmonton Arena District (EAD), the joint venture between Katz Group and WAM Development Group. A public plaza will be a street level.Supplied

EDMONTON - A spate of commercial and residential developments, including the newly announced Stantec Tower project, is sparking debate on whether Edmonton will soon face a glut of offices and condos and a dearth of downtown parking.

The 62-storey Stantec Tower, which will boast 26 office floors and 320 residential suites, is just the latest project in a construction boom that has hit both the multi-family and office markets downtown.

In the office sector, the Stantec Tower by itself is adding 600,000 square feet, of which 450,000 square feet will be taken by its anchor tenant.

Also under construction is a 27-storey tower to consolidate City of Edmonton employees and the Kelly-Ramsey Building, which will add 595,000 square feet of office space when completed in 2016.

But Stantec will pull 1,700 employees from four existing office buildings and city workers will move from offices in buildings such as Chancery Hall and HSBC Bank Place.

“In isolation, any one of these projects would probably be good for downtown, but they combine for about 1.7 million square feet of office space with very little positive absorption,” said Ian Bradley, executive vice-president with Colliers International’s Edmonton office. He predicts Edmonton will face a significant oversupply of offices between 2016 and 2018.

“The Edmonton market absorbs 150,000 square feet in downtown per year and 1.7 million square feet is about 10 years’ supply,” he said.

Net absorption is defined as the difference between tenant move-ins and move-outs year-over-year.

Darren Durstling, CEO of WAM Development Group, a partner in the joint venture behind the Stantec Tower, downplayed concerns of office oversupply.

“We’re only bringing 130,000 square feet of vacancy into the market,” Durstling said, referring to the space left over after Stantec’s 2018 move-in.

“We expect there to be a bit of a bump in the vacancy rates in the market, but given the quality and where this space is located in the top floor, we’re going to be in good shape.”

Mayor Don Iveson also wasn’t worried about excess office space, saying he expects firms from B-class buildings and suburban office parks to help fill the void.

“I think some turnover in the downtown office market is a good thing,” Iveson said.

“It’s going to require some reinvestment and maybe some conversion of space to residential, hotel or other uses.

“Thinking about the market today and trying to keep it exactly the same is not a great city-building strategy.”

Bradley said higher-end buildings such as the Devonian, current Stantec headquarters, CN Tower, Scotia Place and HSBC Place are unlikely to be repurposed for other uses.

He also doesn’t foresee a major migration of companies from suburban offices because they often prefer the ample parking, lower operating costs and taxes and convenient transportation corridors.

“Unless we attract something significant from outside the city to take up all this vacancy, you can move all the tenants you want from the suburbs to the downtown, you’re going to create a problem in the suburbs,” Bradley said.

The construction boom is having another effect — a growing shortage of downtown parking, he added.

As developers snap up building sites, many which have served as surface parking lots, the supply of cheap spots is dwindling.

“In the short term, we are going to have a real shortage of parking anywhere near the arena development, because there is a lot of parking where the arena is and where the new Stantec building is,” Bradley said.

“That parking is gone for the next three to four years and then it will be replaced with more expensive underground parking.”

In the residential sector, developers have also been busy announcing major condo projects in central Edmonton, including the 240-unit, 36-storey Jasper House tower by Toronto “Condo King” Brad Lamb, and twin 38- and 28-storey towers in Chinatown bringing 296 units.

Other projects on the way include the 128-unit Pearl, the 142-unit Fox, the 199-unit Ultima and the 143-unit Symphony towers.

Lai Sing Louie, regional economist for the Canada Mortgage and Housing Corp., said total multi-family residential construction in Edmonton is actually down substantially this year and the housing market is balanced.

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